Most Gulf stocks decline despite oil rise as Hormuz blockade threatens exports

Most Gulf stock markets have been declining since the beginning of the year despite rising oil prices, as positive performance is limited to the Saudi index "TASI", which rose 0.9% to reach 10,824 points, while the Dubai Financial Market index dropped 4.2% and the Qatar Stock Exchange index fell 7.8% during the same period. Meanwhile, the Abu Dhabi Securities Exchange index maintained its stability at around 10,047 points in Friday's trading, despite dropping 1.7% year-on-year.

Disruption to navigation through the Strait of Hormuz directly threatens Gulf oil exports, as nearly a fifth of global daily oil consumption passes through this strategic waterway. The newspaper The National reported that maritime traffic through the strait has fallen sharply since the conflict broke out last February, noting that the number of transiting tankers on Friday did not exceed a handful of vessels amid escalating regional tensions and renewed attacks. Rising oil prices do not compensate for the loss if barrels cannot be transported through the vital waterway.

At the same time, markets are awaiting updates on negotiations between Iran and the Sultanate of Oman regarding temporary arrangements to reopen navigation through the strait. Al Jazeera network quoted Iranian Foreign Minister Abbas Araghchi as describing the agreement as very close, specifying agreed-upon shipping lanes under which northbound ships would pass through Iranian territorial waters and southbound ships through Omani waters. According to the same source, the terms of the proposed arrangement include removing naval mines from a central corridor, establishing protocols for the passage of military vessels, and setting a unified fee system for transiting ships, with the agreement lasting for sixty days.

However, Tehran links any full reopening of the strait to Washington's commitment to the terms of a memorandum of understanding signed last June, which includes Iranian demands to lift the U.S. naval blockade on Iranian ports, withdraw U.S. military assets from the region, and unfreeze Iranian assets frozen due to sanctions. While the pace of military operations in the region has slowed to make room for negotiations, high tensions persist, keeping Gulf investors in a state of cautious anticipation.

What do these terms mean?

TASI: The general index of the Saudi Stock Exchange, measuring the performance of all listed companies on the Saudi market.

Abu Dhabi Securities Exchange Index (ADX): The main index measuring the performance of companies listed on the Abu Dhabi Securities Exchange.

Dubai Financial Market Index (DFM): The main index of the Dubai stock market, reflecting the performance of its listed companies.

Year-To-Date (YTD): A metric showing the percentage change in a price or index from the first trading day of the current year up to a specific date.

Year-on-Year: Comparing a specific value or ratio to its equivalent from a full year earlier, to show the general trend away from daily fluctuations.

Strait of Hormuz: A narrow waterway between Iran and the Sultanate of Oman connecting the Arabian Gulf to the Indian Ocean, through which a significant portion of global oil exports passes, making it one of the maritime channels most sensitive to geopolitical tensions.